Here’s why details matter when you’re running MAT finances

It’s one of the major complaints heard in just about every workplace in the world. People are so bogged down in detail that they can’t carve out time to concentrate on the big issues.

In everyday language, they can’t see the wood for the trees.

When it comes to budgeting for multi-academy trusts, the wood is the big financial strategy – including the three-year Budget Forecast Return that you’re expected to have in place and report to the DfE.

The trees are the hundreds or thousands of details that occupy staff time each month. The invoices, the payments, the contracts, the expenses – and the painful calculations that go into producing management information.

But while nobody wants to spend all their working hours examining every piece of data to a hair-splitting degree, there are times when details matter. If you take too lofty a view of them, you could find yourself rapidly losing your grip on the big things.

Education Accounting Details (1)

Why we need to do detail

Academisation brought a massive change to education finance.

In the days when local government dominated education, the job of a finance team was to work within the budget set by a local authority. You had to avoid using it up too early but you didn’t want to leave money unspent either.

As all academy finance teams know, things are more business-like now. MATs are required to have a sustainable finance strategy, for which they’re accountable directly to government.

In trusts where budgets can run into many millions of pounds, and where there may be several legal entities to account for, that’s a big task.

No MAT is so generously funded that it doesn’t need to worry about running out of budget. Recent years have been particularly challenging – and the immediate future doesn’t look any less so.

MATs have to deal with uncertainty around staff salaries, core funding and education reform, on top of the worries about inflation and economic growth that affect the whole economy.

In a simpler world, you’d set departmental budgets and give the teams simple instructions not to spend more than they’ve got. But with public spending under squeeze – and education buffeted by all kinds of headwinds – you need to be in command of the detail.

The not-so-boring details

As a leader in a finance team, it’s natural and sensible to resist getting too deeply into the weeds of day-to-day routines. But how far into those weeds might you need to venture if you want to keep proper control over the budget?

Here are some key areas where you really need to concern yourself with details.

Variances

Control of budgets is not just about monitoring what’s been spent. You need to be able to analyse where it’s been spent and where unbudgeted spending has cropped up. Buildings and maintenance, energy bills and agency staff are some budgets where “actuals” can often differ wildly from the budget.

Contracts and suppliers

A lot of opportunities for savings can be hidden in the detail here and you’ll miss them if you don’t apply the right scrutiny.

What subscriptions and contracts will renew automatically if you don’t renegotiate a new price?
Is your MAT paying multiple providers for the same service across different sites, missing an opportunity for efficiency? Catering can often fall under this heading.
Could you cut your agency staff costs by locking down an arrangement with a single supplier? Or examining more closely the reason you’ve been spending so much in this area?

Complex calculations

Accounting tasks like prepayments and fixed asset depreciation are not many people’s idea of a good time. But they are important. Your management information won’t be complete and reliable if you haven’t recognised those advance payments in timely fashion or accurately updated the value of those assets.

Nominal codes

Nominal codes might not be exciting but they are important. If spending under a host of nominal codes is bundled together under one budget heading, someone is going to have to unpick that data later on. Better to apply the right coding in the system right away and save confusion later.

Complying with the DfE chart of accounts

The DfE knows how it wants your chart of accounts to look. It might not be mandatory but the academies chart of accounts does ensure consistency and good practice – and its templated structure is the basis for automated filing of annual returns. It makes sense to apply these reporting standards throughout the year rather than make more work as the filing deadline approaches.

Conclusion: Keeping track of the detail

The ideal finance system is one that allows you to easily zoom in and out – from the wide-angle view to the sharply-focused close-up view of any detail.

Ideally, your accounting software will offer you as many accounting dimensions as you need. It will allow accommodate background information and supporting documents, stored alongside each item in the ledger.

Being able to scrutinise every item in the accounts if you need to – and to “slice and dice” the data however you like – helps you stay in proper control. That’s vital when you’re held accountable for every penny of public money.

In the quest to see the big picture, it’s important not to lose your grip on that detail. When it comes to budgeting, a phrase attributed to Albert Einstein sums it up: “Everything should be made as simple as possible, but not simpler.